IRS Debt not a lifetime sentence – Statute of Limitations on Collections
Do you owe back taxes? Are you afraid to go to the mailbox for fear of receiving the dreaded tax bill? If you do owe back taxes, and your bill is accruing both penalties and interest, you have IRS Problems. To help alleviate you and your family's financial and emotional burdens, it is important to seek help from a tax professional.
10 Years
In general, the IRS has 10 years to collect back taxes. This 10 years starts from the day your tax bill is finalized. Your tax bill can be finalized in a number of different ways: If you have a balance due on a tax return; The amount assessed after an audit or a final proposed assessment. Remember that if you did not file a tax return, the IRS will create a substitute return for the taxpayer and the statute of limitations will begin from the date set by the IRS.
It essential that you are aware of the Collection Statute Expiration Date (CSED). This date is helpful if you are working to resolve your tax debt. If the CSED is soon, it is important not to do anything that would actually extend the statute. The IRS may start aggressive action to get you to pay your tax debt before the CSED. Do not sign anything as it may extend your statute of limitations.
Remember, if the IRS does not get payment in full, including interest and penalties, in 10 years time, the balance remaining disappears as the statute of limitations has expired.
Statute of Limitations Extensions
The statute of limitations can be extended if you chose to resolve your tax debt by filing for bankruptcy or obtaining an Offer in Compromise. Another factor that could affect the date is leaving the U.S. for an extended period of time. It should be noted that if you have been assessed a tax debt because of having been convicted of tax fraud, your tax debt will never expire.
The statute of limitations can also be extended by agreement between the IRS and the taxpayer. This agreement has to be done prior to the expiration of the 10-year period and requires the taxpayer to sign a waiver extending the statute of limitations to the date specified on the waiver.
If you are in need of clarification of any of these issues, are looking for IRS Help or have other IRS Problems you need to discuss, our knowledgeable staff will be glad to assist you. We can help you solve your IRS Problems. Contact our office today.
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Comments on IRS Debt not a lifetime sentence – Statute of Limitations on Collections
How can I find out what the CSED is?
When I divorced my husband in 1990 there was IRS debt due. I've never received anything from the IRS asking for the money. With the statute of limitations being 10 years, will I ever have to worry about this?
You shouldn't have to worry about it. But…..I've seen 1990 tax liabilities with open statutes still. The only way to be sure is to have someone (like me) get your transcripts thru a Freedom of Information Act request and check it out. As a pratical matter if the IRS isn't keeping your refunds, you probably don't have anything to worry about.
They have been keeping our taxe refunds for years due to an employer who said he was taking taxes out and didn't to our surprise from 1995. They even kept our 1063 refund this yr and say we still owe 895. Thought the stimulus check would get us finished off when last week they send me something that says we owe 1156 or so from 1999. Shouldn't all this be disappeared by now???? Finding it ridiculous and thought it should be and we should get our stimulus check !!!!
OUTRAGED
There are many factors that can extend the collection statute of limitations. But if you really think about it, the 1999 tax year CANNOT be closed yet because the return wasn't even due until April 15, 2000. So you have a couple more years at best for that tax year. What I really think is that you need a professional to take a look at the entire situation and then advise as to the best course of action.
How can a person find out when the IRS would have created a substitute return? My husband did not file in 1993. Hate to call and ask IRS and get them fired up even more. Also how does a person know the date they say they created it is true?
One way is to call the IRS and ask them to send you a "Record of Account." Then you need to figure out ten years from the date of the LAST assessment. There are many, many things that can toll the statute which means that it can last past 10 years. The best way to know for sure is to hire someone who really knows how to calculate it. But….things to look for are: Offers in Compromise, Collection Due Process Hearings, Bankruptcies, and Innocent Spouse applications. But my no means is that a comprehensive list.
We signed an OIC back in 2005 and do not seem to be making a dent in our debt with the IRS due to the penalties and interest. Is there a statute of limitations or are we just stuck to be paying this forever? We are unable to borrow this money so it is not an option?
my husband died suddenly in 1995 and at that time the irs was holding our refunds due to a tax we owed from 92, we only owed 2,000on it but i wasn't working and so i got ahold of irs and they said they would put me on the not able to pay..they said i would receive a reminder notice each year (which i never have) i'm afraid of what the pen. & int. may be facing me now…I receive my refunds each year with no mention…however my financial sit.hasn't change, if anything,i'm more in debt having to live with one income…i've also been told if i would ever remarry, irs would start billing my new spouse because of me filing married jointly again. is this true? and do you think i should contact them, or being i've never heard anything expect it was excuse???
Cathy,
Probably the best thing to do would be to have a tax attorney inquire of the IRS by using a Freedom of Information Act (FOIA) request. Only then can you get a true picture of what the Collection Statute Expiration Date (CSED) is. But…if you can't afford that or want to do it yourself, you can call the IRS at 1-800-829-1040 and request that they send you a "Record of Account for that particular tax year. A rule of thumb is that if it doesn't show a balance anymore, then the CSED has passed. Often times it will actually show on the transcript that the CSED has passed and the balance has been cleared to zero.
As for remarrying…your new spouse would never be liable for your past tax debts however, if you were entitled to a refund after filing a joint return, you would need to file an Injured Spouse claim to make sure that he would get his proportionate share of the tax refund.
Cindy,
I assume you mean that you had an Installment Agreement back in 2005 not an Offer in Compromise. If you had an Offer in Compromise, once you get finished paying the Offer amount the tax liability is cleared to zero. If you have an Installment Agreement, it does not toll the collection statute and the rule of thumb is that the CSED lasts ten years from the date of assessment.
Does the time the IRS takes to decide on an installment payment plan extend the statute of limitations? I filed for an installment agreement in June, and they still haven't finalized the agreement yet. The agent I'm dealing with is a real stickler and nitpicking over my small self-employment income of less than $500.00 a month after expenses. They still call me occasionally and ask for more information about my income and banking. I don't like to tell them this information over the phone. I've been entirely open and honest with them but I'm afraid that I could inadvertently incriminate myself somehow by giving them figures over the phone. Today the agent called and said she has to get her manager to review the case before it's finalized. This is what she said a few weeks ago. It seems to me like they're dragging this out. I do owe a very large debt from 5 years ago when I was earning over 400,000 a year, but I'm not now, and I don't have much of anything. I've suffered complete financial ruin.